USD/JPY Forecast – US Dollar Drops to Test Support Against Japanese Yen

Christopher Lewis
Published: Nov 21, 2023, 14:58 GMT+00:00

The US dollar has dropped again during the trading session on Tuesday, as we continue to test major support against the Japanese yen.

US Dollar Federal Reserve, FX Empire

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USD/JPY Forecast Video for 22.11.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has dropped down to the ¥147.80 level, an area that has previously been supported. We even blew through there, but now it looks like we are turning around to take this area seriously, and the question now is if and when we are able to rally? I think a lot of people out there are starting to violate the idea that the Bank of Japan might actually tighten monetary policy, but they have said this multiple times on the way up to this level, so the real action will probably come from Washington DC and the Federal Reserve.

With interest rates dropping a bit in the United States, that has made the interest rate differential smaller than it once was, and that might be part of what you are seeing in this chart. That being said, this is a market that still has plenty of support underneath, and it’s probably worth noting that the 50-Day EMA above is more likely than not going to be a little bit of a resistance barrier. That being said, if we can take out the high of the candlestick for the Tuesday session, I am willing to put a small long on in order to take advantage of the overall longer-term trend.

That being said, if we were to break down below the ¥145 level, then we start to talk about the 200-Day EMA indicator which is quite often a longer-term support level. We’ll have to wait and see what interest rates do, and of course it’s worth noting that Thursday is Thanksgiving in the United States so the bond markets won’t be open as long as they typically are this week. With that being the case, we may have a market that is just going to drift around in this general vicinity, trying to sort out its next move. Regardless, I think you do see a lot of choppiness, and it is probably only a matter of time before we go back to the upside, but this has been a brutal pullback. I will watch fundamental noise play out, but right now I’m not ready to start shorting this currency pair. Quite frankly, if the trend has changed, we still have a long way to go.

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About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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